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| Cabot Oil & Gas Announces 2003 Financial Results; Record Fourth Quarter Profits |
HOUSTON, Feb. 17 /PRNewswire-FirstCall/ -- Cabot Oil & Gas Corporation (NYSE: COG) today announced 2003 net income of $21.1 million, or $0.66 per share and discretionary cash flow of $266.4 million. These results compare favorably to 2002 net income of $16.1 million, or $0.51 per share, and discretionary cash flow of $178.8 million. Cash flow from operations reflected the same upward trend totaling $241.6 million in 2003 versus $164.2 million in 2002. "Significant increases in realized commodity prices allowed Cabot to achieve record levels of cash flow for the year," said Dan O. Dinges, Chairman, President and Chief Executive Officer. "These cash flow levels provided Cabot with the ability to reinvest significantly in the business ($188.2 million total investment) while still repaying our Revolving Credit Agreement in its entirety ($95 million), bringing debt down to $270 million." During 2003 Cabot's realized price for natural gas rose 49 percent to $4.51 per Mcf while the realized price for oil gained 24 percent, to $29.55 per barrel. The higher realized prices drove the year-over-year increases in brokered natural gas activity and taxes other than income while the large capital program was instrumental in the increased exploration expense. The Company experienced a slight decline in equivalent production between 2002 and 2003, producing 89 Bcfe for the year versus 91.1 Bcfe the year before. "From a total Company perspective, the decrease was driven primarily by the acceleration of declines in our south Louisiana CL&F related production," commented Dinges. "After three years of very prolific production from four discoveries, the wells began declining and now account for only 25 percent of Gulf Coast production, down from 50 percent at the start of 2003." Dinges added, "While these declines hindered growth this year in the Gulf Coast, our 2003 drilling program was able to recapture a portion of these daily volumes by year-end as evidenced by the Gulf Coast's increase in natural gas volumes between comparable fourth quarters. Separately, the West production declined between years due primarily to the level of reinvestment in 2002 and 2003; while the East experienced a 3.3 percent production growth year-over-year on the strength of a very solid development drilling program that was expanded and will be expanded again in 2004." Fourth Quarter For the December quarter, Cabot reported its best ever fourth quarter results, posting net income of $19.2 million, or $0.60 per share. This is more than double last year's net income of $8.7 million, or $0.27 per share. Discretionary cash flow also improved between comparable quarters with $71.7 million in 2003 versus $58.1 million in 2002. However, cash flow from operations declined between comparable quarters to $35.4 million versus $55.9 million due to changes in working capital primarily driven by a decrease in accounts payable and an increase in accounts receivable. Although not as dramatic, the fourth quarter also saw higher realized prices (16 percent for natural gas and 18 percent for oil), increasing exploration expenses, more brokered activity and higher taxes other than income when compared to the fourth quarter of 2002. Selected Items For the year, the Company's results reflect three types of transactions that historically were categorized as selected items: SFAS No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets", the adoption of SFAS No. 143 "Accounting for Asset Retirement Obligations" and gains or losses on the sale of properties. Specifically, the first quarter of 2003 was impacted by the Kurten field impairment ($54.4 million after-tax) and the adoption of SFAS No. 143 ($6.8 million after-tax), both of which had the effect of reducing net income. The third quarter experienced a benefit to net income of $0.7 million after-tax related to the sale of non-strategic properties in the East. This benefit was net of a $4.4 million gain offset by a $3.7 million impairment. The fourth quarter also experienced a benefit from additional sales of non-strategic properties totaling $2.8 million after-tax. Excluding the impact of these selected items, Cabot's net income would have been $78.5 million, or $2.45 per share, for the 2003 full-year and $16.4 million, or $0.51 per share, for the fourth quarter. Hedging Update The Company continued to layer in hedges covering its natural gas and oil production at increasing prices for 2004 and began to establish a position for 2005. "Five dollars an Mcf became a magic number for us," said Dinges. "The market continued to move up and we continued our strategy of layering in attractive pricing." Cabot has hedged an average of 152,500 Mmbtu per day of its 2004 natural gas production at a NYMEX equivalent price of $4.69 per Mmbtu (which equates to $5.06 per Mcf). Additionally, during December when the first quarter pricing spiked for 2004, the Company collared 50,000 Mmbtu per day of its natural gas production for the first quarter of 2004 based off a NYMEX equivalent price of $6.50 per Mmbtu (or $7.20 per Mcf). "These collars covered each of our regions and provided floors of $6.25 per Mmbtu in the East, $6.00 per Mmbtu in the Gulf Coast and $5.50 per Mmbtu in the Rocky Mountains," commented Dinges. On the strength of these prices, Cabot also has swapped 70,000 Mmbtu per day of 2005 gas at a NYMEX equivalent price of $4.89 per Mmbtu (or $5.28 per Mcf). In terms of oil, Cabot added two range swaps both for 1,000 barrels per day that phases out the price protection at $22.00 per barrel in return for an above market swap price. One trade covers 2004 and receives a swap price of $29.80 per barrel while the other covers 2005 and receives $30.05 per barrel. The natural gas hedges are basin-specific and are all listed in the Company's guidance on its website at http://www.cabotog.com . Outlook "For 2004, we plan to invest $207 million," said Dinges. "The regional breakdown consists of 42 percent for the Gulf Coast, 28 percent for the East, 23 percent in the West and 7 percent in Canada. The focus of this effort is to explore in the Gulf Coast and Canada, exploit our two exploration successes in the Rocky Mountains and continue the momentum in the East that gave us production and reserve growth in 2003 by planning to drill 179 wells in 2004." Listen in live to Cabot Oil & Gas Corporation's full year and fourth quarter earnings discussion with financial analysts on February 18 at 9:30 AM EST (8:30 AM CST) at http://www.cabotog.com . A teleconference replay will also be available at (800) 642-1687 (international (706) 645-9291), passcode 5071554. A replay will be available from Wednesday, February 18 through Wednesday, February 25, 2004. The latest financial guidance, including the Company's hedge positions, along with a replay of the webcast, which will be archived for one year, are available in the investor relations section of the Company's website at http://www.cabotog.com . Cabot Oil & Gas Corporation, headquartered in Houston, Texas, is a leading independent natural gas producer with substantial interests in the Gulf Coast, including Texas and Louisiana; the West, with the Rocky Mountains and Mid- Continent; the East and an expansion effort in Canada. For additional information, visit the Company's Internet homepage at http://www.cabotog.com . The statements regarding future financial performance and results and the other statements which are not historical facts contained in this release are forward-looking statements that involve risks and uncertainties, including, but not limited to, market factors, the market price (including regional basis differentials) of natural gas and oil, results of future drilling and marketing activity, future production and costs, and other factors detailed in the Company's Securities and Exchange Commission filings. OPERATING DATA Quarter Ended Year Ended December 31, December 31, 2003 2002 2003 2002 PRODUCED NATURAL GAS (Bcf) & OIL (MBbl) Natural Gas Gulf Coast 7.7 7.2 29.5 30.4 West 5.8 6.3 23.8 25.3 East 4.7 4.5 18.6 18.0 Total 18.2 18.0 71.9 73.7 Crude/Condensate Gulf Coast 564 657 2,591 2,620 West 42 52 188 216 East 7 9 27 33 Total 613 718 2,806 2,869 Natural Gas Liquids 1.0 10.0 39 40 Equivalent Production (Bcfe) 21.9 22.4 89.0 91.1 PRICES Average Produced Gas Sales Price ($/Mcf) Gulf Coast $4.61 $4.28 $4.78 $3.34 West $3.72 $3.02 $3.67 $2.39 East $5.09 $4.32 $5.15 $3.38 Total $4.45 $3.82 $4.51 $3.02 Crude/Condensate Price ($/Bbl) Gulf Coast $29.43 $25.02 $29.48 $23.69 West $30.23 $26.89 $30.11 $25.24 East $44.90 $24.06 $32.65 $22.09 Total $29.65 $25.15 $29.55 $23.79 WELLS DRILLED Gross 50 23 173 108 Net 33 16 132 72 Gross Success Rate 86% 91% 89% 93% CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) (In thousands, except per share amounts) Quarter Ended Year Ended December 31, December 31, 2003 2002 2003 2002 Net Operating Revenues Natural Gas Production $79,715 $68,417 $322,556 $221,101 Brokered Natural Gas 21,887 18,506 95,816 58,729 Crude Oil and Condensate 15,942 15,756 81,040 67,548 Other 3,704 871 9,979 6,378 121,248 103,550 509,391 353,756 Operating Expenses Brokered Natural Gas Cost 19,760 16,388 86,162 53,007 Direct Operations - Field and Pipeline 14,377 14,239 50,399 50,047 Exploration 15,066 12,484 58,119 40,167 Depreciation, Depletion and Amortization (B) 26,322 26,766 104,251 105,860 Impairment of Long- Lived Assets 0 1,657 93,796 2,720 General and Administrative 6,543 7,100 25,112 28,377 Taxes Other Than Income 8,962 5,834 37,138 24,734 91,030 84,468 454,977 304,912 Gain on Sale of Assets 4,580 49 12,173 244 Income from Operations 34,798 19,131 66,587 49,088 Interest Expense and Other 5,887 6,440 23,545 25,311 Income Before Income Taxes 28,911 12,691 43,042 23,777 Income Tax Expense 9,680 4,036 15,063 7,674 Net Income Before Cumulative Effect of Accounting Change 19,231 8,655 27,979 16,103 Cumulative Effect of Accounting Change (A) --- --- (6,847) --- Net Income $19,231 $8,655 $21,132 $16,103 Net Earnings Per Share - Basic $0.60 $0.27 $0.66 $0.51 Average Common Shares Outstanding 32,197 31,811 32,050 31,737 (A) Cumulative effect of accounting change relates to the adoption of SFAS 143, "Accounting for Asset Retirement Obligations." (B) Includes impairment of unproved properties. CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) (In thousands) December 31, 2003 2002 Assets Current Assets $121,396 $92,162 Property, Equipment and Other Assets 902,805 978,767 Total Assets $1,024,201 $1,070,929 Liabilities and Stockholders' Equity Current Liabilities $154,701 $120,931 Long-Term Debt 270,000 365,000 Deferred Income Taxes 179,926 200,207 Other Liabilities 54,377 34,134 Stockholders' Equity 365,197 350,657 Total Liabilities and Stockholders' Equity $1,024,201 $1,070,929 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) (In thousands) Quarter Ended Year Ended December 31, December 31, 2003 2002 2003 2002 Cash Flows From Operating Activities Net Income $19,231 $8,655 $21,132 $16,103 Cumulative Effect of Accounting Change --- --- 6,847 --- Impairment of Long-Lived Assets --- 1,657 93,796 2,720 Income Charges Not Requiring Cash 29,686 29,869 108,483 112,124 Gain on Sale of Assets (4,580) (49) (12,173) (244) Deferred Income Taxes 12,339 5,439 (9,837) 7,882 Changes in Assets and Liabilities (36,362) (2,154) (24,729) (14,570) Exploration Expense 15,066 12,484 58,119 40,167 Net Cash Provided by Operations 35,380 55,901 241,638 164,182 Cash Flows From Investing Activities Capital Expenditures (36,633) (16,540) (122,018) (103,189) Proceeds from Sale of Assets 10,100 1,017 28,281 4,688 Restriced Cash 15,761 0 0 0 Exploration Expense (15,066) (12,484) (58,119) (40,167) Net Cash Used by Investing (25,838) (28,007) (151,856) (138,668) Cash Flows From Financing Activities Sale of Common Stock Proceeds 877 311 6,728 3,461 Decrease in Short-Term Borrowings (12,345) (27,746) (92,345) (25,746) Dividends Paid (1,288) (1,271) (5,043) (5,079) Net Cash Used by Financing (12,756) (28,706) (90,660) (27,364) Net Decrease in Cash and Cash Equivalents $(3,214) $(812) $(878) $(1,850) Selected Item Review and Reconciliation of Net Income and Earnings Per Share (In thousands, except per share amounts) Quarter Ended Year Ended December 31, December 31, 2003 2002 2003 2002 As Reported - Net Income $19,231 $8,655 $21,132 $16,103 Reversal of Selected Items, Net of Tax: Retirement of Executive Officer --- --- --- 2,205 Revision of Tax Basis on Acquisition --- --- --- (790) Impairment of Long-Lived Assets --- 1,026 58,060 1,684 Gain on Sale of Assets (2,835) (30) (7,535) (151) Cumulative Effect of Accounting Change --- --- 6,847 --- Net Income Including Reversal of Selected Items $16,396 $9,651 $78,504 $19,051 As Reported - Net Earnings Per Share $0.60 $0.27 $0.66 $0.51 Per Share Impact of Reversing Selected Items (0.09) 0.03 1.79 0.09 Net Earnings Per Share Including Reversal of Selected Items $0.51 $0.30 $2.45 $0.60 Average Common Shares Outstanding 32,197 31,811 32,050 31,737 Discretionary Cash Flow Calculation and Reconciliation (In thousands) Quarter Ended Year Ended December 31, December 31, 2003 2002 2003 2002 Discretionary Cash Flow As Reported - Net Income $19,231 $8,655 $21,132 $16,103 Plus: Cumulative Effect of Accounting Change --- --- 6,847 --- Impairment of Long-Lived Assets --- 1,657 93,796 2,720 Income Charges Not Requiring Cash 29,686 29,869 108,483 112,124 Gain on Sale of Assets (4,580) (49) (12,173) (244) Deferred Income Taxes 12,339 5,439 (9,837) 7,882 Exploration Expense 15,066 12,484 58,119 40,167 Discretionary Cash Flow $71,742 $58,055 $266,367 $178,752 Plus: Changes in Assets and Liabilities (36,362) (2,154) (24,729) (14,570) Net Cash Provided by Operations $35,380 $55,901 $241,638 $164,182SOURCE Cabot Oil & Gas Corporation
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CONTACT:
Scott Schroeder of Cabot Oil & Gas
Corporation, +1-281-589-4993
